Party Formation and Competition

In the majority of democratic political systems, districts elect representatives, who form coalitions, which determine policies. In this paper we present a model which captures this process: A citizen-candidate model with multiple policy dimensions in which elected representatives endogenously choose to form parties. Numerical analysis shows that in equilibrium this model produces qualitatively realistic outcomes which replicate key features of cross-country empirical data, including variation consistent with Duverger's law. The numbers of policy dimensions and representatives elected per district are shown to determine the number, size, and relative locations of parties. Whilst multi-member district systems are found to reduce welfare.